Firms Brace for Wave of Retiring IT Workers

Pilot Flying J is one firm tackling the talent exodus through knowledge-sharing programs and modernization efforts

IBM engineers work with a System 360 mainframe computer using COBOL in this circa 1960 handout photo.
Photo:
handout/Reuters

Baby-boomer retirements over the next few years could leave companies without the IT expertise required to operate their legacy systems, even as they race to update older apps and shift more workloads to the cloud, industry advisors warn.

Part of the problem is that in the rush to modernize IT systems, many firms neglected to document legacy IT processes or hire new people with a working knowledge of how they function, they say.

As a result, a surge in retirements over the next few years “will leave many large companies with unsupported systems,” said Martha Heller, chief executive of Heller Search Associates, a recruiting firm that focuses on technology executives.

“If you don’t have anyone to support those old systems, you will have major gaps in your infrastructure,” she said.

Without taking steps now, the problem will only get worse, she adds. The total U.S. labor force participation rate is projected to hit 61% in 2026 after peaking at 83.8% in 1996, when the entire baby-boom generation was under 54 years old, according to U.S. Census and Bureau of Labor data.

For the IT workforce, A combination of retirements and industry growth will create some 140,000 open jobs in the IT annually over the next seven years, according to IT trade group CompTIA.

“Any of the big institutions or companies that have been around for decades have built their systems on mainframes and older applications,” said Steve Trautman, principal and founder of Steve Trautman Co., a talent risk-management consulting firm.

Getting next-generation workers interested in these older systems can be challenging, especially when “they feel like they’re staring at a dinosaur in the face,” he added.

A separate CompTIA study found younger IT employees tend to be more focused on implementing new technology, while older employees prefer working to improve existing technology. The results, published earlier this month, were based on a survey of roughly 1,000 business professionals in a range of ages.

One company is using the talent exodus to encourage knowledge sharing and quicken modernization efforts.

Mike Rodgers, CIO of Pilot Travel Centers LLC, said like many firms the 60-year-old roadside truck-stop operator uses APIs to run new customer-service apps on a mix of cloud and legacy systems.

“Some of our people who have been around for a while are running those legacy systems,” he said, adding that the skills needed to run older systems are becoming increasingly valuable as these older workers retire.

One approach, he said, has been to divide the company’s IT development team into support and new product development units, with a mix of old and young tech workers: “That way the knowledge transfer is happening naturally,” Mr. Rodgers said.

At the same time, the Knoxville, Tenn.-based firm – known as Pilot Flying J – is winding down its legacy systems on a gradual basis and shifting to the cloud, in order to “deliver new capabilities without upsetting the apple cart,” he said.

Likewise, Mr. Trautman said businesses need to create apprenticeships, training sessions and other knowledge-transfer programs aimed at passing on critical IT skills.

“Don’t trust that it’s just going to happen if you put older and younger workers in the same office,” he said.

Cloud-native firms, working with newer technology, have largely avoided the problem of passing along legacy IT skills to younger tech workers, analysts say.

“Legacy technology just hasn’t been part of our DNA, which means that ‘Gen Zs’ all the way through to baby boomers are on equal footing,” said Diana McKenzie, CIO of cloud-enterprise software maker Workday Inc.

By working exclusively with cloud-based technology, she added, “there isn’t a fear that, if someone chooses to leave, they take with them critical, outdated knowledge that only they possess.”

Still, Michael Chui, a partner at McKinsey Global Institute, said the cloud alone does not necessarily offer a complete solution: “There is plenty of custom code in the cloud,” he said, adding that IT needs to document their work, whatever their presence in the cloud.

Ms. Heller adds that firms should also consider decommissioning technologies that are not relevant to younger employees.

“Baby boomer retirements may actually be a convenient motivator to CIOs and their boards who have been resistant to modernizing their portfolios,” she said.

Workday’s Ms. McKenzie agrees: “Using the talent shortage as a lever to drive investment in transformation and digital investment could be a great way for CIOs to address the issue.”